Open Thread & News Round-Up: Debt Negotiations

Here's the latest...

LA Times—White House may be open to short-term debt deal:

The White House signaled Wednesday that President Obama could accept a short-term deal to raise the debt ceiling, but only if it appeared lawmakers were close to an agreement on a significant deficit reduction plan.

The hope of such a "grand bargain" was revived Tuesday by the so-called Gang of Six senators, who outlined a deal that would achieve nearly $4 trillion in deficit reduction in the next decade through spending cuts, entitlement reform and an overhaul of the tax code.

But Congress must act to raise the debt ceiling by Aug. 2, and the plan discussed in the Senate Tuesday was just a framework, not specific legislation that could take weeks to move through Congress.

Meanwhile, House Republicans are insistent that Democratic Senate Majority Leader Harry Reid push a vote on the abysmal "Cut, Cap and Balance" bill that the House passed. Which is just a time-wasting bit of pointless brinkspersonship that pushes the country (and the global economy) closer to the fucking edge.

Former Republican Senator Judd Gregg, who is now an analyst with Goldman Sacks (lulz), says: "My gut tells me that we'll need a weekend of drama—maybe a weekend of the government not paying its bills—politicians need drama to make something happen. As soon as social security checks don't go out, the politics will change. I suspect it'll take artificial drama to get closure past the House."

The "artificial drama" of people not getting money they need to live. Christ. These people's heads are so far up their asses I don't know they get any oxygen.

If you want to know how truly devoid of integrity, ethics, decency, maturity, and any sense of responsibility the GOP caucus has actually become, this is all you need to read: TPMDC—It Begins: Top Republicans Push Away from Gang of Six Plan.

As time goes on, and conservative interest groups and members of Congress rip into it, support among Republicans for the Gang of Six plan to reduce deficits will begin to wane. In fact, that's already happening.

In a publicly released memo meant to undermine support for the Gang of Six plan in its current form, House Budget Committee chairman Paul Ryan (R-WI) laments, "it increases revenues while failing to seriously address exploding federal spending on health care, which is the primary driver of our debt. There are also serious concerns that the proposal's substance on spending falls far short of what is needed to achieve the savings it claims."

Read the full memo here.

Not all of Ryan's complaints ring hollow. The plan legitimately does punt a lot of the spending cut questions to Congressional committees -- though under the threat of across the board cuts if those committees fail to report out more targeted reductions. And, whether you want plenty of new revenue, or no new revenue, the plan leaves a lot of questions unanswered. Members claim it would count, in budgeting terms, as a tax cut, because the Congressional Budget Office's baseline assumes that all of the Bush tax cuts will expire at the end of 2012.

Relative to current policy, though, it's supposed to draw in $1 trillion in new revenue -- surely a sticking point for House Republicans. But where do those revenues come from if the plan lowers top tax rates (or at least the top rates), eliminates the Alternative Minimum Tax (at a cost to the deficit of $1.7 trillion), and doesn't eliminate the most expensive loopholes and benefits in the tax code? That's left to Congress to decide

It's not just Ryan, though. House Armed Services Committee Chairman Buck McKeon (R-CA) says he opposes the Gang of Six plan because it cuts too deeply into military spending.

And, perhaps most telling of all, a Senate GOP Leadership Aide told Politico, "Background guidance: The President killed any chance of its success by 1) Embracing it. 2) Hailing the fact that it increases taxes. 3) Saying it mirrors his own plan."

So, on the one hand, we have President Obama who values bipartisanship and the appearance of compromise above all else, and, on the other hand, we've got the Congressional Republicans, who will deliberately tank solutions just because Obama likes them. The more you want to play with me, the less I want to play with you. Our government is being run (or not run) by an infuriating collection of playground brats.

And even the Republicans' own base is getting irritated with this garbage: "Congressional Republicans are being so dogmatic and recalcitrant in their refusal to raise the debt ceiling...that wealthy donors are telling Majority Leader Eric Cantor (R-VA) to knock off the demagoguery and support tax increases."

While Cantor fiddles, the Federal Reserve "is actively preparing for the possibility that the United States could default," and Wall Street is "devising doomsday plans in case the clock runs out."

Discuss.